Habit Formation and the Theory of Addiction
AbstractIn the light of repeated rejections of the Hall (1978) version of life-cycle permanent income hypothesis and other empirical puzzles, the habit formation hypothesis has increased in popularity since the 1980s. However, existing formulations of habit persistence do not always perform well empirically. This paper pursues two objectives: (1) to outline the habit persistence hypothesis, and (ii) to review thetheory of addiction with a focus on issues of relevance to the theory of consumption.
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Bibliographic InfoPaper provided by The University of Melbourne in its series Department of Economics - Working Papers Series with number 635.
Length: 39 pages
Date of creation: 1998
Date of revision:
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Postal: Department of Economics, The University of Melbourne, 5th Floor, Economics and Commerce Building, Victoria, 3010, Australia
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CONSUMPTION ; DRUG ADDICTION;
Other versions of this item:
- E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
- D1 - Microeconomics - - Household Behavior
- D9 - Microeconomics - - Intertemporal Choice
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